The Hindu Business Line : M&M turns around in Q3 with Rs 24.32-cr profit

AFTER reporting losses in the first two quarters of the current fiscal, Mahindra & Mahindra Ltd (M&M) has been able to reverse the trend for the third quarter (October-December 2001) with a net profit of Rs 24.32 crore (Rs 43.81 crore).

"Cost control measures and higher volume sales have helped M&M to return to profits,'' said Mr Bharat Doshi, Finance Director, M&M.

"The voluntary retirement scheme we undertook earlier is showing results now,'' he said.

For the nine-month period, M&M has reported a net profit of Rs 2.53 crore (Rs 91.26 crore) after wiping out its current year's first-half losses of Rs 21.79 crore.

Net sales in the third quarter rose to Rs 917.79 crore, up by 1.4 per cent from Rs 904.87 crore in the year-ago period. Other income was Rs 5.19 crore (Rs 8.04 crore).

Net operating profit was Rs 49 crore (Rs 43.81 crore) in the year-ago period. The growth was largely due to gains in market shares achieved in both automotive and farm equipment sectors, significant reduction in material costs arising from cost re-engineering initiatives and decrease in staff costs on account of a VRS, the company said.

In the automotive segment, sales of utility vehicles grew by 10 per cent to 14,947 vehicles in the third-quarter (13,620 units).

"This growth in sales, achieved in the context of an almost flat industry growth resulted in a significant improvement in the company's market share from 47.3 per cent in year-ago period to 51.3 per cent in the third-quarter of this year,'' M&M said in a release.

This improvement was due to the introduction of the new model MAXX, it claimed.

In the LCV segment, M&M's sales grew by 28 per cent to 1,468 vehicles in the third-quarter (1,147 vehicles), despite a seven per cent decline in the industry. Its market share improved to 12.5 per cent to 9 per cent.

In the farm equipment segment, sales continued to decline although the company was able to restrict the fall. Tractor sales in the third-quarter were 17,896 units as compared to 21,973 units in the year-ago period.

For the quarter, automotive segment contributed Rs 489.13 crore to the revenue while farm equipment segment contributed Rs 416.38 crore.

According to Mr Doshi, the fourth-quarter would depend on the rural demand scenario. "We are not yet clear on the rural demand situation although the monsoon has been good,'' he said.

In terms of profit before tax and interest, the automotive segment contributed Rs 35.35 crore and farm equipment segment Rs 46.92 crore.

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